Budget airline SpiceJet is in constant dialogue with Boeing for compensation that needs to be paid to the airline for loss to business due to grounding of MAX aircraft since March 2019.

In an exclusive interview with CNBC-TV18, chairman and managing director Ajay Singh said that while he hopes that the compensation amount is fair and equitable, the final sum will be known after 3-4 months of MAX's return to service.

SpiceJet has a total order-book of 205 MAX planes, out of which 155 are firm orders and 50 are options. The 12 MAX aircraft of SpiceJet, which have already been inducted, are grounded since March after a global grounding of this aircraft type post two fatal accidents.

Posting record net profit for the June quarter at Rs 263 crore on higher revenue from operations, the airline had also started factoring in the minimum reimbursements that it expects from Boeing under the segment of other income. For the June quarter, the airline factored in a sum of Rs 114 crore as compensation.

The airline has been in negotiations with Boeing for reimbursements related to leasing rentals, maintenance and crew salaries for the MAX crew.

“The discussions are ongoing but after a legal assessment, we are confident that while the final settlement amount will be much more, this is the minimum amount (Rs 114 crore) that we should receive from Boeing. Hence, we have included this in other income to offset the same amount that we have included under expenditure,” chief financial officer Kiran Koteshwar had told CNBC-TV18 post-April-June earnings.

MAX, the fastest-selling model of Boeing, has been grounded worldwide since March after two fatal accidents involving the aircraft type in a matter of five months. The first involved an aircraft of Lion Air and the second was operated by Ethiopian Airlines.

Singh also said that Boeing has indicated that they expect US Aviation regulator Federal Aviation Administration (FAA) to recertify the aircraft by early November. “We expect the aircraft to fly here by January,” Singh added.

While SpiceJet hopes to induct MAX aircraft to its fleet as soon as possible as this will lead to immense cost savings for the airline, Indian regulator Directorate General of Civil Aviation has repeatedly said that India will be conservative in bringing MAX to Indian skies.

India is also likely to conduct its own checks after FAA certification on the MAX planes.

First Published:Oct 3, 2019 5:27 PM IST